There has been a lot of talk lately about well-known drugs such as Lipitor, used to control cholesterol levels, going generic. What does it mean in terms of the patent when a drug goes generic? It means that the patent has expired and is no longer in-force. In the pharmaceutical industry, we are currently on the verge of what has been called the dreaded “patent cliff” with many blockbuster drug patents expiring at the same time even though the patents were not granted at the same time. These patents, which are at risk of expiration between now and 2015 could cost the drug industry an estimated $250 billion in sales.

The patents in question have run the 20 years given for enforcement so why should the pharmaceutical companies be upset. They may be upset because they didn’t really get the full 20 years. This shortening of time is due to the time it takes to get the drug through the clinical trials that are required by the U.S. Food and Drug Administration before the drug can be marketed. Patents are applied for before the clinical trials begin and the clinical trial take an average of 10 years, so the “effective” life of a drug patent tends to be between seven and 12 years, rather than the normal 20 years for non-drug patents. Once a drug patent has expired, other companies are free to make generic drugs with the same formulation. With non-drug patents, expiration also signals the end of the “monopoly” the patent holder was given in exchange for knowledge to the public.

But drug companies aren’t the only ones that don’t always get their 20 years before losing their “monopoly.” Let’s look at how patent term is determined and how it can be lost.

Patent applications filed after June 8, 1995 are given a term of 20-years from the application filing date or the priority /filing date of another previously filed application. Patents filed prior to that date have a term of 17-years from the patent issuance date. Applications pending on the changeover date, June 8, 1995, are given the longer of the 17-years-from-issue and the 20-years-from-filing terms.

So, as a general rule of thumb, if the patent issued within the past 20 years, then it probably is still in-force, but even if it has issued in the past 20 years, it could be that the patent has expired. One way for a patent to expire prior to that 20-year date is failure of the patent holder to pay a renewal or maintenance fee. These fees are paid just to maintain a granted patent.

Maintenance fees on patents in the U.S. are due 3½, 7½ and 11½ years after grant of the patent. No maintenance fees are due while a U.S. patent application is pending. The timing for the payment is tricky as the fee may not be paid in advance; the patent holder must wait until the payment “window” opens six months before the due date, before paying a maintenance fee. At the end of the half-year window, during which a maintenance fee may be paid, a six-month grace period begins, during this time a patent holder may still pay the maintenance fee if they also pay a small surcharge. If the maintenance fee has not been paid at the conclusion of the grace period, the patent expires for non-payment of maintenance fees. It can, however, still be revived for a period of up to two years by a petition showing that the non-payment was unintentional or unavoidable. Unlike the U.S., some countries require the payment of maintenance fees for pending patent applications. Some of these countries require a yearly fee and refer to it as an annuity fee. There are also some countries that require no maintenance fee at all, either for patents while pending or patents that have issued.

Another way that patents expire before the 20 year mark from the time they are filed is because these patents claim priority to an earlier filed patent. Patents can claim that they stem from, or are related to, another patent that was filed before it, to get the benefit of that previous date in the U.S. first-to-invent filing system. As this system is currently changing to a first-to-file system, like in other countries, claiming priority to previous applications will cease to have the importance it has had in the past.

There are many factors that determine how long a patent will be in-force just as there are many effects once they have expired.